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Mina has been making headlines lately with its ZK roll ups news and the increasing price action making many investors start wondering if Mina is a solid long term investment and if the Mina tokenomics make sense? In this article we will look at the tokenomics and the use cases of the Mina Protocol token.

Mina Tokenomics

MINA Use Case

The Mina network requires its native token MINA to participate in producing new blocks by staking MINA and for purchasing SNARK proofs via their own marketplace called the Snarketplace. Block producers use the Snarketplace to buy and sell SNARK proofs.

Due to the Mina network using a proof-of-stake consensus mechanism MINA tokens are required to be staked in validators that produce blocks and process transactions, this gives MINA holders the ability to become a block producer by staking their MINA tokens. Users can choose to delegate their staked MINA tokens to any validator they wish, this allows smaller holders of MINA to participate in the network and earn rewards.

Is Mina token inflationary?

Yes Mina is an inflationary token with no supply cap, some may say this is a bad tokenomics model however the Mina team made this decision to try and encourage more staking participation in the early stages of the project which in turn helps Mina Protocol achieve its high level of decentralization and security.

Mina has set inflation targets from the first year through to 28 months onwards, as time goes on Minas inflation will drop from an initial 12% inflation target down to a 7% inflation target from 24 months onwards.

The ongoing inflation is caused by block rewards getting paid out to block producers whenever they successfully complete a transaction, by month 96 since launch it is estimated that the total supply of MINA in circulation will be around 1.8 billion tokens due to the block rewards being paid out.

What is the max supply of Mina?

There is no supply cap however there was a total of 1 billion MINA tokens distributed at launch with an 8 year lock up period. At the time of writing this there are 831,244,350 MINA tokens in circulation, this is around 83% of the current tokens distributed in circulation.

Mina Tokenomics via CoinGecko

 

How were the MINA tokens allocated?

At launch 1 billion MINA tokens were distributed to the community, backers, core contributors, Mina foundation endowments, Labs endowments and for block rewards.

  • Community allocated 42.3%
  • Mind Foundation Endowment allocated 6%
  • 0 (1) Labs Endowment allocated 7.5%
  • Backers allocated 20.5%
  • Core Contributors allocated 23.6%

Are the MINA tokenomics safe?

While many would question the nature of the unlimited supply cap Mina has structured this in a very specific way and has run the numbers for many years ahead to ensure that this model will work for both the network and the users of the network.

With a current circulating supply of 1 billion with over 800 million of those in circulation this is a good sign as majority of the tokens available are currency in circulation, given the fact that the community was allocated 42% of the tokens at distribution this shows that a large chunk of the circulating supply is held by your every day user rather than the team and investors. The Mina team also expects their allocated tokens to drop from 6% down to 4.5% over a 4 year post launch period.

What is Mina?

Mina Protocol is the world’s lightest blockchain built for its privacy, security and light weight size of the blockchain, optimizing zero knowledge technology or also called ZK-rollups Mina is able to process transactions faster while maintaining low transaction costs.

Mina achieves a very high level of security and decentralization by allowing users to have complete control and ownership over their data by utilizing zkApp and smart contracts powered by zero knowledge which allows users to share proofs of their data rather than sharing their data itself. This allows users of the Mina Protocol to keep a very high level of privacy and security.

The team at Mina is currently working on establishing a bridge between Mina and other chains, the first being with Ethereum. This will allow other chains to connect and take advantage of Minas features such as its privacy and secure log in features in the zkApps. Due to Minas small blockchains size the team believes it will be easy to incorporate and use Minas proof system with other chains.

Mina also offers a way for its blockchain to connect to off-chain data from the internet allowing Mina to access real world data in real world time, this in a sense extinguishes the need for an external oracle such as ChainLink. Developers can use this to bring real world data on chain while maintaining the high level of security needed for their users.

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